HCLTech Revenue Races Past ₹1 Trillion Milestone In FY23

While FY23 revenue was at a record high, the rupee revenue for the March quarter declined 0.4%, sequentially, and 17.7% from a year ago to ₹26,606 crore. Q4 net profit fell 2.8% sequentially, but rose 10.8% from a year earlier to ₹3,983 crore. Earnings before interest and taxes (Ebit) margin dropped by 150 basis points to 18.1% in the quarter. The management said the sequential fall was due to global macroeconomic headwinds, besides Q4 being typically a seasonally weak period.

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For FY23, rupee revenue grew 18.5% over FY22 to ₹1.01 trillion and net profit was up 10% to ₹14,851 crore.

The firm said it won 57 large deals in FY23, with the total contract value (TCV) rising 6.6% to $8.8 billion.

It also reported 13 new deals with a TCV of $2.1 billion, down 8% in Q4 over the year ago. The company added two $100 million-plus clients in the March quarter. With this it has 19 such clients.

The 12-month attrition rate fell by 220 basis points to 19.5%, while net fresher addition in FY23 was at 26,734, falling short of its target of 30,000. The company’s total headcount was up 8.2% to 225,944.

Going forward, HCLTech expects revenue growth at 6-8% for FY24, with the Ebit margin at 18-19%. However, it did not offer an estimate in terms of the number of freshers it may hire in this financial year.

“We’ve had a fantastic FY23. Overall revenue grew 13.7% in constant currency, against our guidance of 13.5-14%. So, we came pretty much at midpoint of our guided range. The growth is attributed to good momentum in our services business, and HCLTech’s software business. It’s across segments, sectors and geographies. We have also crossed the important milestone of $1 billion annual recurring revenue in the software business," C Vijayakumar, managing director and chief executive officer, HCLTech, said.

“There are a lot of external dynamics, but we have some comfort in our ability to navigate this market because of the mix of capabilities and expertise in our services offerings. These are relevant in customer investments on digital transformation, as well as when they want to cut down on such initiatives and optimize their run-the-business spends. Clients’ growth metrics are also reflective of our propositions being relevant to all economic conditions, and a lot of high-growth companies being our clients, where we have potential to grow," Vijayakumar added.

Most quarterly slowdowns are attributable to “booking and ramp-up delays on the discretionary spend-side," he said. “We don’t see too much stress on client spends, and this gives us good confidence in both transformative and operative tech spends."

The company sees “good opportunities" in the banking, financial services and insurance sector, despite a major slowdown in North America in March. BFSI contributes one-fifth of HCLTech’s annual revenue.

Industry stakeholders and analysts welcomed HCLTech’s earnings performance. Sanjeev Hota, head of research at brokerage Sharekhan, said the sequential revenue decline met analyst expectations, while both net profit and Ebit margin for Q4 were higher than expectations. Even revenue growth guidance was better than expectations “especially considering Infosys’ guidance of 4-7%."